The high hopes of insulin-independence for patients with type 1 diabetes have been tempered by the limited availability and short-term function of transplanted human islets. The development of alternate sources of cells, through guided differentiation of stem cells or transdifferentiation of other mature cells, has therefore emerged as a viable prospect for diabetes cure. The low efficiency of achieving the cell phenotype has focused attention on factors that govern the pancreatic to endocrine progenitor developmental transition. We have determined that the concerted actions of Pdx1 and Oc1, two transcription factors expressed during this transition, contribute to formation and maturation of endocrine progenitors and their descendants in mice by directly regulating the proendocrine gene Ngn3 and by participating in a cross-regulatory transcriptional network. We hypothesize that Pdx1-Oc1 interaction drives induction of the endocrine pancreas gene program during normal development and in receptive progenitor cells. We test this hypothesis by (1) characterizing the genetic interaction between Pdx1 and Oc1 during embryonic development, (2) determining whether Pdx1 and Oc1 establish a permissive epigenetic landscape for activation of genes of the cell lineage, and (3) by determining whether combined Pdx1 and Oc1 gain of function can promote cell formation and function in vivo, in human pancreatic duct cells and in human embryonic stem cells. These studies make use of ex vivo and in vivo approaches using both mouse and human model systems. Successful completion of the proposed aims will reveal biochemical, epigenetic, and developmental mechanisms of action whereby Pdx1 and Oc1 cooperate to establish the endocrine and cell lineages. This information can be used in directed differentiation and transdifferentiation strategies to generate new fully functional cels from stem cells, progenitor cells, or other non- cells.